Personal spending on clothing and footwear dropped 2.3 percent, or $9.75 billion, in December to $418.75 billion compared to the previous month, according to the U.S. Bureau of Economic Analysis (BEA), which was on in line with similar reports on an unexpected decline in consumer consumption in the month.
The BEA report released on Friday was delayed due to the partial federal government shutdown that overlapped December and January, and was also blamed for the poor holiday shopping reports.
The U.S. Census Bureau reported that December retail sales fell 1.2 percent, the largest drop since September 2009. Department stores fell 3.3 percent, while sales at apparel and accessories stores were down 0.7 percent from November.
The BEA said overall real personal consumption expenditures (PCE), adjusted for inflation, decreased $77.9 billion in the month, reflecting a decline of $67.2 billion in spending for goods and a $18.2 billion falloff in spending for services. Within goods, recreational goods and vehicles was the leading contributor to the decrease. Within services, the largest contributor to the decrease was spending for household electricity and gas.
Disposable personal income (DPI), a key barometer for consumer spending, increased 1.1 percent, or $173.1 billion, and unadjusted PCE fell 0.5 percent, or $76.6 billion.
Real DPI increased 1 percent in December and real PCE decreased 0.6 percent. The core PCE price index, excluding food and energy, was up 0.2 percent. BEA said the increase in personal income in December primarily reflected increases in personal dividend income, compensation of employees and farm proprietors’ income.
Personal outlays decreased $71.3 billion in December, while personal saving rose to $1.21 trillion in the month and the personal saving rate–personal saving as a percentage of disposable personal income–was 7.6 percent.
Due to the government shutdown, the report combines estimates for December and January. Personal income decreased 0.1 percent, or $23.8 billion, in January, while DPI fell 0.2 percent, or $35.1 billion.
The decrease in personal income in January was blamed on decreases in personal dividend income, farm proprietors’ income and personal interest income that were partially offset by increases in social security benefit payments related to cost of living adjustments, and other government social benefits such as the Child Tax Credit and the Affordable Care Act refundable tax credit.
In all of 2018, personal income and outlays increased 4.5 percent compared with an increase of 4.4 percent in 2017. DPI increased 5 percent in 2018 compared with an increase of 4.4 percent in 2017.
In 2018, PCE rose 4.7 percent, compared with an increase of 4.3 percent the previous year, while real DPI was up 2.9 percent in 2018, compared with an increase of 2.6 percent in 2017. Real PCE increased 2.6 percent last year compared with an increase of 2.5 percent in 2017.